Steinhoff's Path to Recovery Not Enough as Shares Tumble
Steinhoff Takes Initial Steps Toward Recovery as Losses Narrow
(Bloomberg) -- Steinhoff International Holdings NV reduced its loss by 70% in the fiscal year ended in September. The step toward a recovery wasn’t enough to stop its shares from falling.
The net loss was 1.2 billion euros ($1.3 billion) during the period, down from 4 billion euros in the previous year. The owner of Conforama in France and Mattress Firm in the U.S. was reporting its second set of full-year audited earnings in as many months following revisions to the company’s finances in the wake of the late-2017 crisis.
Steinhoff’s assets were valued at 16.4 billion euros as of September, compared with 17.5 billion euros the previous year, the company said in a presentation on its website. The retailer had previously made 15.3 billion euros of writedowns because of accounting irregularities, as former management led by ex-Chief Executive Officer Markus Jooste oversaw a series of related-party transactions that inflated profit and asset values.
The stock fell as much as 11% in Frankfurt, the most since May 10, extending losses since the crisis erupted to 97%.
No Opinion
In Steinhoff’s financial statement for the year through September 2017, released in early May, auditors at Deloitte LLP made clear that the company’s ability to operate as a going concern was in doubt. That’s because of numerous lawsuits and regulator probes, while a long-awaited debt restructuring has yet to be finalized. The auditors didn’t express an opinion over the 2018 numbers either.
No individual has yet been charged for his or her role in Steinhoff’s near collapse, including Jooste.
Steinhoff faces a string of claims and its legal woes deepened in May when a Frankfurt court received 10 suits to be included in a mass German investor case. That’s on top of 6.2 billion euros of claims highlighted by the group in its 2017 annual report.
“While we still have a long way to go, including resolving the various legal proceedings that have been initiated against the company, progress is being made,” Steinhoff said. “Notwithstanding the significant difficulties the group faced over the period, at operating company level a number of key subsidiaries continued to report solid performances.”
The firm reiterated that sales in the 2019 fiscal year are expected to drop because of asset disposals, more competition and a weak trading environment. Operating expenses will remain under pressure and financing costs will increase, the firm said, adding that it could “experience an adverse impact” on its results.
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